Turkish lira drops 9% as Erdogan calls for citizens to convert out of dollars, gold - CNBC News

Turkish lira drops 9% as Erdogan calls for citizens to convert out of dollars, gold
Fred Imbert | John Melloy
Published August 10, 2018.
CNBC.com

Turkish President Recep Tayyip Erdogan speaks during Russian-Turkish-Iranian talks at Black Sea resort of Sochi, Russia, November 22, 2017.
The Turkish lira added to its steep losses on Friday after Turkish President Recep Tayyip Erdogan asked citizens to convert their dollars and other foreign currencies as well as gold holdings to local lira.

The lira traded down 9 percent against the U.S. dollar at 6.04 following Erdogan's remarks and briefly fell more than 12 percent. The currency had already declined sharply against the greenback before Erdogan's latest comments.

Erdogan said Turkey was facing an "economic war" and noted the country would respond to those countries who had started it.

Speaking to a crowd in the northeastern city of Bayburt, a defiant Erdogan said the dollar would not block Turkey's path, framing the sell-off of the lira as a "national struggle."

"We are facing economic attacks today, and we need to defend our country," Erdogan said, according to a translation. "The economic attack against us now is the same as the coup attempt against us. I'm urging our country to increase outputs, to increase exports."

Turkish stocks also fell on Friday as the iShares MSCI Turkey ETF dropped 11.4 percent. The ETF was already down 42.3 percent this year prior to Friday's losses.

The sharp drop in Turkish assets came after a delegation returned from Washington with no apparent progress on the detention of U.S. pastor Andrew Brunson, who is charged with supporting a group blamed for an attempted coup in 2016.

Last month, U.S. President Donald Trump threatened to slap "large sanctions" on the Middle Eastern nation if it refuses to free Brunson. The U.S. then announced on Aug. 1 sanctions on Turkey's justice and interior ministers, prohibiting U.S. citizens from doing business with them.

This is a developing story. Check back for updates.

—Reuters contributed to this report.